Wal-Mart: to grow or not to grow?

By Nicole Maestri

NEW YORK (Reuters) - Twice in the past year, Wal-Mart Stores Inc (WMT.N: Quote, Profile, Research, Stock Buzz) has given its stock a shot in the arm by announcing plans to rein in expansion in the United States.

Investors are now watching to see if there will be a repeat performance at the retailer's annual analyst meeting on Tuesday and Wednesday. Wal-Mart, whose shares have done very little this year, typically outlines its capital spending and store expansion plans there.

"Next week's analyst meeting could prove a positive near-term catalyst if management further reduces square footage growth or capex," Goldman Sachs analyst Adrianne Shapira wrote in an research note.

But since Wal-Mart has cut its growth plans twice in the past year -- once at its last analyst meeting and again at its shareholders meeting in June -- it raises the question of how much more room there is for the world's largest retailer to pull back.

"I would be surprised if between June and now that they made a huge material change to what they told us, but they might," said MFC Global Investment Management analyst Sarah Henry.

PUSHING FOR A SLOWDOWN

Analysts have pushed Wal-Mart to pull back on U.S. expansion so it can concentrate on improving sales at its more than 3,400 namesake discount stores and supercenters, which combine grocery stores with the discount store format.

Its shares rose nearly 4 percent last October when it said it would delay opening new stores that are close enough to existing locations to draw away customers, and planned to build smaller ones where possible to reduce costs.